After the different posts I have been developing concerning the coming out of the new Directive on sustainability in the European framework, it is time to highlight key aspects of the presentation.
Firstly, the reporting will be done by large companies and small and medium-sized enterprises, except micro-enterprises, that are public interest entities and will include, in the management report, the information necessary to understand the impact of the company on sustainability issues and the information required to understand how sustainability issues affect the company’s development, performance and position.
Specifically, the information shall include the following:
- A brief description of the company’s business model and strategy, indicating the resilience of the business model, opportunities for the company arising from sustainability, the company’s plans concerning its transition to a sustainable economy, how the business model and strategy impacts sustainability issues and how its approach is implemented.
- Description of objectives and progress towards achieving these objectives aligned with environmental factors.
- Description of the role of the administrative, management and supervisory bodies concerning sustainability issues.
- Description of the company’s policies concerning sustainability issues.
- Report on the existence of incentive schemes linked to sustainability issues.
- Description of the due diligence process applied concerning sustainability issues and the main actual or potential adverse impacts of the companies’ activities and value chain.
- Description of the main risks for the company related to sustainability issues.
- Relevant indicators duly presented.
On the other hand, it is important to note that sustainability reporting standards, taking into account the purpose of each specific sustainability reporting standard, should:
- Specify the information that companies are required to disclose on environmental factors.
- Specify the information that companies should disclose on social and human rights factors.
- Specify the information that companies must disclose on governance factors.
Finally, it is essential to highlight the non-requirement of disclosure on intangible resources other than those recognised in the balance sheet, incorporated in Directive 2013/34/EU. In particular, it is noteworthy that the Directive in question mentions as a widely known and recognised fact that assets and other intangible factors, including internally generated intangible resources, are not sufficiently disclosed, which would prevent a proper assessment of the company’s development, performance and position, as well as the monitoring of investments. It mentions the growing gap between the book value of many companies and their market valuation, requiring adequate reporting on intangible resources for all large companies and all companies, leaving out, according to the Directive, micro-enterprises. It is true that the Directive, at this point, ends by alluding to the fact that certain information on intangible resources is intrinsic to sustainability issues and should, therefore, form part of sustainability reporting.
